Radio station owners settle with FCC over payola scandal

As a result of a payola scandal that rocked commercial radio over the past few years, radio listeners may soon notice a little more variety on their local airwaves, thanks to a tentative agreement to settle allegations with the Federal Communications Commission (FCC).

Four major broadcast companies, Clear Channel, CBS Radio, Entercom and Citadel, would pay the government $12.5 million and provide 8,400 half-hour segments of free airtime for independent record labels and local artists, according to The Associated Press.

The agreement is aimed at curbing payola — generally defined as radio stations accepting cash or other consideration from record companies in exchange for airplay. The practice has been around as long as the radio industry and was made illegal after scandals in the late 1950s.

The entire board of the FCC has not yet approved the settlement, but its commissioners do seem pleased with the outcome. Jonathan Adelstein has been very aggressive in the payola fight and has been credited with working out the settlements. "I love music and I want radio to sound fresh, dynamic and real. But payola gets in the way of authenticity because money drives the music, not its quality," he said. Michael Copps, in a statement Monday, said radio is "supposed to be our pipeline to exciting, local undiscovered acts — not more nationalized pablum from big media companies." FCC spokeswoman Tamara Lipper said of the payola issue that "the whole point is that people should know when they're being influenced and by whom."

Broadcasters would admit to no wrongdoing under this three-year settlement, which would end an FCC investigation into payola practices.

At the same time of the settlement, the broadcasters arranged a separate deal that will open the airwaves to smaller independent record companies, and with it lesser-known artists and local musicians. The American Association of Independent Music, a group of independent record labels, has received a commitment from the same four broadcasters for the free airtime, the officials said. The free airtime would be granted to companies not owned or controlled by the nation's four dominant music labels — Sony BMG Music Entertainment, Warner Music Group, Universal Music Group and EMI Group. This new approach is designed to require equal access to radio music programmers for all record companies as well as transparency in all dealings.

Payola, or the practice of record companies paying stations to play their music and reporting it as a 'spin' for chart purposes, is a practice that has been around almost as long as radio itself. A big scandal in the late 1950s nearly crippled the young form of rock and roll, destroyed the careers of popular disc jockeys like Alan Freed and almost ruined Dick Clark's career, until he agreed to cooperate fully with authorities. The practice of payola was made illegal in 1962. Since then, the practice has continued on a very small scale, with only an occasional fine issued. There were minor scandals involving third-party promoters in recent years but several years ago, then-New York Attorney General Eliot Spitzer began investigating new payola allegations, culminating in settlements from several major record companies and CBS and Entercom. Spitzer had long been critical of the inaction of the FCC in combatting payola.